My latest article is up on The Industry Standard, Facebook vs. MySpace: The battle for global social network dominance. It takes a look at MySpace and Facebook, and makes a prediction about which will win in the competition for international audience.

When researching the article, I came across a lot of data about social networks in various countries, and it as interesting to see the various social networks that are winning in countries around the world. According to Comscore, “the number of worldwide visitors to social networking sites has grown 34% in the past year to 530 million, representing approximately 2 out of every 3 Internet users.”

Here’s a quick rundown of some of the social networks that are less familiar to those of us in the U.S., and the countries in which they are popular. The data comes from sources here and here.

Orkut - Brazil

9158.com - China

hi5.com - Peru, Columbia, Central America, Mongolia, Romania, Tunisia

bebo.com - Ireland, New Zealand

cyworld - South Korea

Live Journal - Russia

This is also interesting - a visual look at MySpace (blue) vs. Facebook (red) according to Compete.com.

My most recent article for The Industry Standard just went up – How MySpace Music could beat iTunes. If you’re interested, please give it a read!

The music industry is something that I’m really thinking about lately with the launch of Fat J Records and signing Cara Austin – so the recent news about iTunes overtaking Wal-Mart and MySpace Music’s launch are both of great interest to me. And there are a lot of things about the MySpace vs. iTunes topic that I didn’t have space to include in my article for The Standard. So I thought I would just list them here, kind-of stream-of-thought.

MySpace Music can beat iTunes by supporting musicians. This is the premise of the article that I wrote for The Standard. Basically, I think that if MySpace Music provides data about the fans that purchase music, ticket and merchandise to the musicians, it can beat iTunes. Go read the article for the whole argument.

CDBaby is a model of how MySpace Music could work. CDBaby is an unbelievable music retailer that caters only to independent artists. And this is what its privacy policy says (these points are directed at buyers who visit the site):

“Only the musician whose music you buy will know who you are. If you don’t even want the musician to know about you, just say so at the bottom of your order form.”

I use CDBaby to sell CDs for Cara Austin, and so far, NOT ONE person has requested that CDBaby withhold their contact information. This is because people who go so far as to buy a CD are usually fans - and they don’t mind the band or artist being able to contact them again in the future.  According to the company’s Website, CDBaby has sold 4,202,465 CDs to customers resulting in $71,482,212 paid directly to the artists.

iTunes is a store, MySpace is a community. I read this quote from someone involved in the deal, and this is a really important point. While there are millions of people who buy music from iTunes, the MySpace community that uses MySpace to discover new artists and read about what they are up to, will be a powerful environment for making a purchase. With the possibility of revenue coming from MySpace, artists will do even more to make sure that their pages are attractive, interesting and compelling. And the community of music on that site is going to get stronger and stronger. Imagine 5 million musicians adding content, video, new songs and new song versions - this is going to be incredibly powerful and impossible for iTunes to rival.

Facebook’s chance to win in this space is shrinking by the minute. Facebook is gaining on MySpace in the social networking space, but Facebook’s support of music is, well, pathetic. They are going to have one shot to try to release a music platform that users will like (and use) but it’s not looking good. With MySpace’s announcement of the support of three of the four major labels, one possibility is that Facebook already has the support of the fourth (but that is highly unlikely and just speculative on my part).

International will be huge. I read that MySpace Music isn’t going to be able to distribute music internationally yet. What? What is the licensing issue with that? My suggestion – sign up all the indies asap and start selling to Japan, England, Australia, and everywhere else that has an appetite for U.S. music immediately – or else that could be a place that MySpace Music will be vulnerable.

DRM free matters, but won’t be the thing that wins it for MySpace. As part of the announcement, MySpace announced that they music that is sold from its music store will be DRM-free. (DRM=Digital Rights Management, it is the protection that Apple places on its files that prevents people from being able to share them.) This is a big deal, but not the biggest, as this will just (finally) compel Apple to follow suit with iTunes.

There is still a perception issue that could cause MySpace some serious problems. MySpace has kind of a seedy image. The site’s design is fairly unattractive, and it’s hard to navigate the social network without running into something that borders on pornography or spam. The company is going to have to do battle against that perception to win back people who have become disillusioned by previous negative experiences with MySpace.

Can Apple prevent iPods from using this service? Technically, I’m not sure if there is a way for Apple to limit the sites from which the iPod can download music, but if users are unable to load music from MySpace Music to their iPods, that would be a serious setback to MySpace. It also would likely cause a revolt among iPod users against Apple, but it would still be a hiccup in the acceptance of the service.

In a recent article, I made a series of predictions about the future of the music industry - one of those predictions was that “many new online and digital services will rise and fall.” Now that I think about it a bit more, that prediction seems kind of cheap because in the course of researching that story, I came across lots of the new online and digital services that have already risen. So half of the prediction was more just reporting than prophesying.

Even so, I thought it might be helpful to include a list of the new music models that I found while doing the research. If my prediction holds, many of these will eventually fail, and most of the others will be acquired or consolidate. Staying on top of this quickly changing industry will be tough for awhile, but knowing what’s out there now is a good place to start.

This list is obviously not exhaustive, so if you know of others, or have feedback on any of those listed below, please leave a comment. Also, some of these companies have revenue models that are clear, but others were a bit less so. If you have any input, let me know.

Goombah - Music recommendations based on your iTunes playlist and a comparison of what other people who share similar music interests are listening to. Goombah scans your iTunes library, finds other people who share your musical tastes, and then recommends songs to you based on the songs that they listen to. Revenue model: Affiliate income with potential to get into paid placement, with labels paying for their artists music to be part of the recommendations.

finetune- This site lets you type in an artist and they will createa custom playlist of songs based on that artist and others “like” them. Alternately, you can build your own playlist of up to 45 songs from 15 artists. You can then take your custom playlist and embed it on your blog or MySpace page. Revenue model: advertiser-supported

Groove Mobile - The leading music-for-your-cellphone provider, they have mobile downloads, P2P sharing, music recommendations, streaming radio and music subscriptions. Groove Mobile also powers Orange’s Music Player (U.K.) and the Sprint Music Store. Revenue model: Subscriptions

Livewire Musician - This Web application lets bands, labels or managers book gigs and tours, communicate with fans, manage radio promotions, manage the press, and track radio play. A basic account is free, and there are a la carte premium services available. Revenue model: Licensing fees

matchmine - Suggests other songs (and movies and blogs) that you‘ll be interested in based on your preferences. The company is a product of The Kraft Group/New England Patriot’s interactive media and innovation team. Revenue model: Sells general user data to partners

Nextcat - Social networking for the entertainment industry, which in the entertainment industry looks more like traditional networking. Revenue model: Advertising and sponsored listings and placements

nimbit - Business management tools for the indie musician. The company’s mission is “to put musical artists in complete control of their own music business and brand, enabling them to reach their full potential as quickly as possible.” They do this by providing solutions that allow artists to sell CDs and digital downloads, merchandise, and provides assistance with online ticket sales, e-mail list management, Website design and content hosting and a variety of other services. Revenue model: Paid services

OurStage - This site works kind of like a traditional “battle of the bands.” Bands upload their music, users of the site vote on what they like the best. Every month there are winners of cash prizes. Revenue model: The site sells the music that is uploaded to the site.

Sonicbids - Connecting bands and music promoters. The site allows musicians to put together one digital press kit (DPK) that is then distributed to promoters and helps the artists book gigs without having to send out physical press kits. Revenue model: Promoters pay a one-time fee and artists pay for submissions.

Amie Street  - This site allows indie artists to upload their music - the more popular the song, the more expensive it is to download. All songs are free to start and then move up in cost the more popular that they get. When users recommend songs to their friends, they get credit to buy more music. Revenue model: Earn 30% of every song sold

Strayform - Artists put proposals online and they are (or aren’t) funded by the fans who see them. According to Strayform, “Fan funded proposals let artist get paid without giving up a big cut, without blowing money on ads, and without long term restrictive contracts.” All the media is Creative Commons licenced, so fans can use everything freely on any device and share on P2P networks. Revenue model: ?

SellaBand - With this site, musicians need to find 5,000 people who “believe in them” (people prove this by giving $10 to the artist) and then SellaBand takes the artist to the “best producers and studios in town.” Then the three (artist, believer and SellaBand) split the profits from sales of $.50 downloads. According to this article from TechCrunch, some artists have hit the $50,000 mark and have already headed to the studios. Revenue model: Splits revenue with the artist and users

CDBaby - Online record store that sells albums by independent musicians. They only sell music that comes direct from musicians, and pay the musicians directly, weekly. They also help to facilitate the digital distribution of music. Revenue model: They take $4 per CD sold, plus an initial $35 fee.

iTunes - This is a site that probably needs very little introduction. MP3 library, from which users can download songs for $.99 per track, $9.99 per digital album. Revenue model: iTunes takes 30% of each sale.

Amazon MP3 Downloads- Works just about the same way that iTunes does, except that users don’t have to download a special player to get songs, and digital albums cost $8.99 each. Revenue model: Amazon takes a percentage of each sale

Rhapsody- Another MP3 download site, this one features unlimited downloads based on various subscription deals. Revenue model: Memberships plans starting at $12.99 per month

TuneCore- This site allows artists to upload their digital tracks, and then TuneCore manages their relationships with digital distributors, including iTunes, Amazon.com and Rhapsody. I wrote a more in-depth assessment of the site here. Revenue model: Charge artists a yearly fee

In compiling this list, I relied heavily on TechCrunch and Xconomy. Thanks!

Everywhere I turn it seems that there is a story about the demise or revolution of the music industry (depending on your perspective), sparked by two huge music-related stories that broke last week.

The first was the report that music sales were down 9.5% in 2007. The bright note from that report was that the sale of digital music tracks was up 45%, but even that huge leap didn’t help the industry overall. The second was the announcement that Sony BMG will be joining the other three major labels in offering DRM-free songs.

The music industry is scrambling to deal with the impact of the Internet on its traditional business models.

In this October 2007 post, Michael Arrington of TechCrunch sums up nicely the issues that are facing the music industry, and ReadWriteWeb echoes some of the same sentiments. Basically, sales of CDs and digital downloads are not going to make huge amounts of money for anyone going forward. Both argue that the real money will be made from ticket sales for live performances, merchandising, and special limited-edition physical copies of the music.

But there is money being made from digital downloads - it’s just not of the scale that the major record labels are used to. In 2007, there were 844.2 million digital tracks sold. Radiohead’s recent experiment, in which the band released an album online for free download and asked listeners to pay what they wanted, made them more money from the digital distribution then they made from the digital distribution of all the rest of their albums combined. If this seems strange, there is a simple reason - Radiohead was released from their contract with their record label, a contract that in the past excluded them from any royalties from the digital distribution of their music (remind anyone of the current writer’s strike?) Many signed bands and musicians are currently stuck in contracts like these, the relics of an era when digital distribution didn’t really matter.

Of course, there is still money being made in the music industry, but as fewer people are buying CDs (that are costly to produce and distribute) and as more people are downloading digital music (that is practically free to reproduce and distribute), less money is being made. And, the money is being spread among more musicians. The Long Tail is in full force in the music industry, allowing more people to make money as consumers spend their dollars on a wider variety of music and musicians.

So this puts the music industry in this strange position. The indie artists, who are making some money on their small but loyal audiences and the Long Tail, but often not enough money to live off of, would be psyched to get a record contract because the record companies have the marketing and distribution capabilities that they don’t have access to. The big (and already famous) bands, are trying to get out of their contracts in favor of the freedom that the indie artists enjoy. And the record companies are panicking. This is creating a weird, wild situation where everything is about to totally implode if change doesn’t happen quickly.

The really big question is: What online business model is going to work for the music industry going forward? Any successful model will have to support both the record labels and the artists who are producing music. And it will have to be one that consumers will spend their money on.

Here are my predictions:

1. The new model will be all about the audience.In the past, bands knew how many records or songs they sold, but not the name of the individual that bought them. Digital download and distribution, as well as social networking sites like MySpace, now let musicians know much more intimately who their audience is. By collecting the name of the individual who downloads their song (whether they pay for it or get the download for free), musicians will be able to have a much more personal relationship with their audience - and they will be able to re-market to them in the future. As musicians begin to realize that having the name of their fan is worth more money than the $0.70 they get from iTunes, they will either begin  offering all their songs for free, or Apple will have to adjust their business model and begin sharing data with the artists. Radiohead may have been the first major label to try offering free downloads, but many others are following suit. Trent Reznor (of Nine Inch Nails fame), just produced a Saul Williams album and released it online the same way that Radiohead did - and he has told everyone about the data that they collected. Reznor is bemoaning the fact that only 18.3% of the people who downloaded the album paid $5 for it. He thinks that this stinks (and it might) but he is neglecting the really exciting fact that 154,449 people downloaded Williams’ album! That is an audience of 154,449 if you at least collected an email address. That is a significant fan base - and in my opinion, it is going to be the primary model of the future.
2. Musicians will begin releasing songs more frequently, as well as more versions of each song. When digital downloads become the norm (and that day is close), there will be no need to stick with the CD format where musicians release all their fully produced songs in one giant lump. Instead, they’ll release things as they are done, there will be more live performance and acoustic versions of songs, and more interesting bits, more looks into the recording studios, more evidence that songwriters and musicians are humans and that every version that they play isn’t perfect. (UPDATE: Looks like Mark Cuban agrees with this prediction.)
3. Record labels will try to hold onto their business models. They will succeed only until current contracts run out, but they will eventually fail. They will do this not because they don’t see the writing on the wall, but because they can’t figure out how to change.
4. A new type of record label will emerge. The new label will serve more as a helper to the artist than an owner of the artist. This new label will assist with marketing, bookings, networking and the other promotional aspects of the music business. But instead of owning all the rights to the artist, musicians will PAY their labels for their help, and the musicians will retain their rights. The new labels that will be successful will be the ones that know how to do SEO, online marketing and social networking. These types of labels will become the norm. (And they probably wont’ be called record labels.) (UPDATE: Looks like CNET agrees with this prediction: “If we end up ridding the world of labels, we’ll only have to re-create them–in some other, probably more nimble form.”)
5. Apple will be one of the new “record labels.”
6. Many new online and digital services will rise and fall. In 2-3 years, we’ll be left with the winners. At least three of the winners will be companies that no one has even heard of yet.
7. There will be new ways to buy music. Walking through Target, no longer will you head to the music section to buy music. Instead, as you hear a song piped over the airways, or walk past a TV that is playing a music video and decide you like the song, you will be able to use your phone or mp3 player to purchase and and download the song instantly.
8. The stuff inside the CD case will still be valuable in digital format, but it will look completely different. People still buy CDs for the lyrics and the liner notes inside - as well as for the artwork and the experience of opening the case and looking through the packaging. This won’t change, there will always be a market (although a smaller one) for the special edition hardcopy CDs. And it won’t be long until someone comes up with a way to sell that stuff in digital format, as well. But although the digital information will be the same, it won’t look the same as the CDs of today. This will be a huge money-maker, much bigger than anyone expects.

UPDATE: This Music Lessons post by Seth Godin is an awesome add-on to this article. Go read it.

Photo by SqueakyMarmot

Web 2.0 is a term that has existed since 2004. The phrase is now widely used by anyone who works on or with the Internet, but Web 2.0 is one of those expressions that many business people outside the Internet industry only “sort-of” understand.

To understand Web 2.0, you first have to be familiar with Web 1.0. Web 1.0 is the Web as it existed up to and immediately after the Internet bubble burst in 2000. Web 1.0 followed the “broadcast model,” meaning that any content that existed on the Web was one-way - the content was written and published by the author (a company or an individual) for the reader. The best way of understanding the broadcast model is: “We talk, you listen.” There are still many sites that are Web 1.0, including most corporate and informational Web sites. Examples include Weather.com and GM.

Web 2.0 was born when the broadcast model started to change to a conversational model.

The hallmarks of Web 2.0 are conversations and user-generated content. Sites that provide technology platforms that allow users to interact and to contribute content are Web 2.0 sites. Examples include Facebook, MySpace, Flickr, YouTube and blogs - these sites provide the technology that lets users submit content and interact with each other in various ways, such as by submitting photos and videos, chatting or by commenting on on each others content.

Today, many Web 1.0 sites are moving toward Web 2.0 by launching Web 2.0 features. These sites publish content, but solicit a response from users to further enhance the conversation. For example, retail sites such as Walmart and Target now allow visitors to post reviews of products. Traditional publishing companies like the NY Times have opened up their articles for comments and have discussion areas to facilitate reader interactions.

The following are some of the most useful articles you can read to find out more about Web 2.0:

• What is Web 2.0- This article by Tim O’Reilly is often sourced as the definitive treatise on Web 2.0.
• Web 2.0 - This 2005 article was written by Paul Graham, and is a very good explanation of Web 2.0.
• What is Web 2.0- This 2006 documentary from TechCrunch features Editor Michael Arrington’s interviews with start-up CEOs about Web 2.0. (24 Minutes). The CEO’s definitions of Web 2.0 really illustrate why this term is so difficult to pin down and how everyone defines it a little differently (around minute 5).
• Web 2.0- The Wikipedia entry about Web 2.0.
• Web 1.0 vs. Web 2.0 - This post will help you understand the differences between 1.0 and 2.0.

How big is the World Wide Web in 2007? The answer to that question is hard to pin down, to say the least. I can find little reliable data since a report published by Berkeley in 2003 (at that time the Web had 170 terabytes of information, 17x the size of the Library of Congress), and an analysis done by Antonio Guilli in 2005 placing the number at 11.5 billion Web pages. The most recent data that I could find was an article from Pandia from February 2007 indicating that the size of the World Wide Web is somewhere between 15 and 30 billion pages, probably closer to 30 billion.

My point? The Web is big. Huge. And the best way that I know how to keep up with the new information that is being produced about my brands on a daily basis is to use Google Alerts.

This is a simple tool to use, and in my opinion, every professional up and down an organization should be using it. To set it up, take the following steps:

1. Go to the Google news home page.
2. Click the icon in the left-hand column that says “News alerts.”
3. Enter the search terms that you want to track. I recommend tracking your company name and your personal name at the very minimum.
4. In the “type” field, select “comprehensive” - this will track the Web, news, blogs, groups and all the information that Google has indexed.
5. How often depends on your needs. I recommend once-per-day, but if you are really a stickler for finding out information more quickly, you could select “as it happens.” The only warning about that setting is that you’ll be getting multiple notifications per day and it could quickly overwhelm your inbox depending on how many alerts you set up.
6. Click “create alert.”
7. In the past I needed to confirm my alerts - I no longer need to do that, but I’m not sure if that is because I am using a Gmail account, because I have set up so many news alerts in the past, or because Google has done away with the confirmation step. So just be aware that you may have to confirm your subscriptions (or you may not).

That’s it! You’ll now start getting notifications to your inbox. You can remove subscriptions by following the links that are in each email, and Google has created a page to manage alerts that will let you see all your notifications in one place and add and remove them easily.

That covers the how, but a quick word on the why you should do this. The primary reason to set up alerts is obvious - if you are the owner or an executive of a company or work in the PR department, it is your responsibility to monitor your brands. This is the easiest, least-intensive way to make sure that you are up-to-date on what people are saying about your company. But there are some other benefits that you might not realize:

- You will know what is going on with your company. If you’re an executive, you are likely privy to information before the rest of the employees, so this might not apply to you as much as to the non-executive who isn’t kept up-to-speed. It’s possible that by monitoring your company’s alerts, you’ll find out about acquisitions, financials, layoffs and even scandals before the rest of your colleagues. This happened famously at New York Times Digital where employees found out about layoffs before they were announced because of an article that was published in the New York Times.

- You will make sure that a bad image of you isn’t being leaked to the public. By keeping tabs on your personal brand (ie, your name) you will make sure that you know what people are saying about you and how you are being portrayed on the Web. Think that your MySpace page won’t show up in a Google search? Think again. By monitoring my alerts with my maiden name (Melissa Reyen), I found out that I am among the record holders for Harvard softball for most times grounded into a double play. Slightly embarrassing, but not as embarrassing as this.

- You will look smart. If you set up alerts to monitor not only your company, but also your competitors and the product or service that your company produces, you will be able to stay on the cutting-edge of the news for your industry. When you find out a particularly juicy tidbit, you can email your colleagues, who will think that you are super-smart and insightful for knowing this information, even though it was sent directly to you from Google.

- You can be proactive. If you find out that some unfortunate information is being spread about your company, you can work to to avert the problem and end up looking like a hero. When I worked at Ziff Davis, we were often accused of spamming people - anyone who works at a publishing company knows that this is a fairly regular occurrence, not because we were spamming, but because there are humans involved in the unsubscribe process and things occasionally go wrong. This happened, and my colleague Mary Hart was on the case quickly to respond to a blogger who was ranting. Her actions immediately turned the rant into praise for the exemplary customer service that she provided.

Bottom line: If you don’t have Google Alerts set up, do it today. The small amount of effort will be well worth it.

Last week, I posted my first video to YouTube. Like most videos that are uploaded to the site, mine was for friends, a silly inside joke wishing my friend Kim a happy birthday in a public and embarrassing manner.

But after posting the video - which was incredibly easy to do - I started wondering how many people have uploaded videos to YouTube since the site was founded in February 2005. It’s difficult to find stats about YouTube because the company (owned by Google) doesn’t often release information on its users, but this Reuters article from July 2006 claims that, when the article was written, 65,000 videos were being posted to the site per day. If that number is accurate, it’s also likely to be much higher by now. (Although another more recent article from TechCrunch estimates that the number of videos being uploaded to the site daily is between 10,000 and 65,000.)

Some more stats - Compete.com shows that the number of people visiting YouTube is 49,532,320, up 4.5% this month and 94% this year, placing the site’s audience more than double Facebook’s (24,264,850), and gaining on MySpace’s (65,210,800). And that Reuters article claims that in 2006, visitors were watching more than 100 million videos per day on YouTube - again, that figure has likely soared in the past year and a half.

From these stats, I think it’s safe to say that online video is huge - and remember these numbers are from YouTube alone. There are many other online video sites that are popular and gaining audience (Hulu comes to mind).

But all this online video watching isn’t going to happen without consequences, according to the experts. Recent and well-reported (see stories here, here, here and here) research from Nemertes Research shows that by the year 2010, there could be serious slow-downs in the Internet from all the bandwidth demands unless infrastructure is boosted to keep up. According to the report, Nemertes estimates “the financial investment required by access providers to bridge the gap between demand and capacity ranges from $42 billion to $55 billion, or roughly 60%-70% more than service providers currently plan to invest.”

The bandwidth demands on the Internet’s infrastructure are clearly rising. But the sky is not falling. Although you would think it just might be from the recent coverage that this research has sparked:

Internet Might Collapse in 2010
Internet to go down in 2010?

And my personal favorite:

Back to Soup Cans and String?

Does this remind anyone of anything, like, maybe a technology issue that was supposed to cripple business a decade ago? To me, this is really starting to sound a lot like Y2K.

Granted, the coverage will have to continue for months and the fear, uncertainty and doubt will have to rise significantly to reach Y2K levels. But in its early stages, the rumblings are the same. And I would like to suggest that we will see the same result.

The Nemertes report claims that to avert the crisis, an extra $42 billion to $55 billion needs to be invested into the infrastructure of the Internet. To put this in context, in preparation for Y2K, “the United States government spent $8.8 billion dollars on Y2K fixes. Private U.S. businesses shelled out an estimated $100 billion dollars to prepare for the bug,” according to an article by CNN.

There is money to be spent when it’s needed. And there is time to correct these issues before they cause us to revert back to soup cans and string. Even the folks sponsoring the research agree. As Internet Innovation Alliance (IIA) co-Chairman Larry Irving told USA Today:

“We’re not trying to play Paul Revere and say that the Internet’s going to fall. If we make the investments we need, then people will have the Internet experience that they want and deserve.”